U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

49–112 

" ! SENATE 109TH CONGRESS

1st Session 

TREATY DOC. 

2005

109–7 

PROTOCOL AMENDING TAX CONVENTION ON 

INHERITANCES WITH FRANCE 

MESSAGE 

FROM

THE PRESIDENT OF THE UNITED STATES 

TRANSMITTING

PROTOCOL AMENDING THE CONVENTION BETWEEN THE UNITED 

STATES OF AMERICA AND THE FRENCH REPUBLIC FOR THE 

AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF 

FISCAL EVASION WITH RESPECT TO TAXES ON ESTATES, INHERITANCES, AND GIFTS SIGNED AT WASHINGTON ON NOVEMBER 

24, 1978 

NOVEMBER 4, 2005.—Protocol was read the first time, and together with 

the accompanying papers, referred to the Committee on Foreign Relations and ordered to be printed for the use of the Senate 


E:\Seals\Congress.#13
(III)

LETTER OF TRANSMITTAL 

THE WHITE HOUSE, November 4, 2005. 

To the Senate of the United States: 

I transmit herewith for the advice and consent of the Senate to 

ratification a Protocol Amending the Convention Between the 

United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with 

Respect to Taxes on Estates, Inheritances, and Gifts, signed at 

Washington on November 24, 1978 (the ‘‘Convention’’), signed at 

Washington on December 8, 2004 (the ‘‘Protocol’’). Also transmitted 

for the information of the Senate is the report of the Department 

of State with respect to the Protocol. 

The Protocol provides a pro rata unified credit to the estate of 

a French domiciliary for purposes of computing U.S. estate tax. It 

allows a limited U.S. ‘‘marital deduction’’ for certain estates if the 

surviving spouse is not a U.S. citizen. In addition, the Protocol expands the United States jurisdiction to tax its citizens and certain 

former citizens and long-term residents and makes other changes 

to the treaty to reflect more closely current U.S. tax-treaty policy. 

I recommend that the Senate give early and favorable consideration to the Protocol and give its advice and consent to ratification. 

GEORGE W. BUSH. 

(V)

LETTER OF SUBMITTAL 

DEPARTMENT OF STATE, 

Washington. 

The PRESIDENT, 

The White House. 

DEAR MR. PRESIDENT: I have the honor to submit to you, with 

a view to its transmission to the Senate for advice and consent to 

ratification, a Protocol Amending the Convention Between the 

United States of America and the French Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with 

Respect to Taxes on Estates, Inheritances, and Gifts, signed at 

Washington on November 24, 1978 (the ‘‘Convention’’), signed at 

Washington on December 8, 2004 (the ‘‘Protocol’’). 

The Protocol modifies the tax treatment of certain transfers of 

property by gift or upon death. The Protocol provides a pro rata 

unified tax credit to the estate of a French domiciliary for purposes 

of computing the U.S. estate tax. It allows a limited U.S. ‘‘marital 

deduction’’ for certain estates, if the surviving spouse is not a U.S. 

citizen. In addition, the Protocol makes other changes to the Convention to reflect more closely current U.S. tax-treaty policy. 

The Protocol was conluded in recognition of the importance of the 

United States’ economic relations with France. The Department of 

the Treasury and the Department of State cooperated in the negotiation of the proposed Protocol. It has the full approval of both Departments. 

Respectfully submitted. 

CONDOLEEZZA RICE. 

Enclosure: Key Provisions of the U.S.-France Estate Tax Protocol. 

(1) 

KEY PROVISIONS OF THE U.S.-FRANCE ESTATE TAX PROTOCOL

The proposed Protocol amends the Estate and Gift Tax Convention (the ‘‘Convention’’) between the United States and France, 

which was signed in 1978 and entered into force in 1980. It makes 

a number of changes to take account of changes to U.S. domestic 

law that were enacted in 1988, in a manner similar to recent 

agreements with Canada and Germany. It also includes a number 

of minor technical changes and updates to reflect changes in the 

law and policy of both countries since the Convention entered into 

force. 

The Protocol introduces a marital exclusion with respect to certain property. Under the provision, transfers of non-community 

property from a French domiciliary to a spouse who is not a United 

States citizen that may be taxed by the United States solely on the 

basis of situs under the treaty can be included in the tax base only 

to the extent that the value of the property, after applicable deductions, exceeds 50 percent of the value of all property that may be 

taxed by the United States. This exclusion is not available, however, to certain transferors who are former U.S. citizens or longterm residents who lost such citizenship or residency for tax-avoidance reasons. 

The Protocol also introduces a U.S. estate tax marital deduction 

up to the Internal Revenue Code’s ‘‘applicable exclusion amount’’

($1,500,000 in 2005) when the surviving spouse is not a U.S. citizen. Certain 1988 changes in U.S. law deny a marital deduction 

when the surviving spouse is not a U.S. citizen. This provision is 

intended to provide relief from these changes in the case of estates 

of limited value. 

The Protocol also modernizes the provisions dealing with the 

elimination of double taxation and provides a pro rata unified credit to the estate of a French domiciliary for purposes of computing 

the U.S. estate tax. Under this provision, a French domiciliary is 

allowed a credit against U.S. estate tax ranging from the amount 

ordinarily allowed to the estate of a nonresident under the Internal 

Revenue Code ($13,000) to the amount of credit allowed to the estate of a U.S. citizen under the Internal Revenue Code ($555,800 

in 2005), based on the extent to which the assets of the estate are 

situated in the United States. 

The Protocol makes other changes to the Convention to reflect 

more closely current U.S. tax treaty policy. For example, the Protocol adds a ‘‘saving’’ clause, pursuant to which the United States 

reserves the right to tax U.S. citizens and domici1iaries as if the 

treaty had not come into effect. It also preserves U.S. taxing rights 

with respect to certain former citizens and certain former long-term 

residents. The Protocol defines the term ‘‘real property’’ in a manner consistent with the definition provided in U.S. domestic law 

2 

and U.S. income tax treaties, and adds a rule that allows source 

state taxation of stock in real property holding companies. 

Article 9 of the Protocol addresses the entry into force of the Protocol. The United States and France will notify each other when 

their respective constitutional and legislative requirements for 

entry into force have been satisfied. The Protocol will enter into 

force on the date of receipt of the later of such notifications. Although the Protocol generally will be effective with respect to gifts 

made and deaths occurring after entry into force, the relief provided with respect to surviving non-citizen spouses and the pro 

rata unified credit will be effective with respect to gifts made and 

deaths occurring after November 10, 1988. Claims for refunds asserting the benefits of the Protocol that otherwise would be barred 

by the statute of limitations must be made within one year after 

the first day of the second month of entry into force of the Protocol, 

however; and all claims for retroactive relief are subject to the 

rules regarding the United States’ ability to tax former citizens and 

long-term residents. 

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